Misleading Medicare Mantra

June 15th, 2011 at 10:16 pm

When you criticize the Republican’s plan for Medicare privatization, their kneejerk comeback is to claim that Medicare is going bankrupt.  They’ve got to break it to fix it.

It’s a misleading non sequitur that should not go unchallenged.

The claim was amplified recently by the Medicare Trustees report, which projects that the Medicare Hospital Insurance trust fund (“Part A” of the program) will become insolvent by 2024.

But before you jerk that knee, consider these points:

–the other main parts of the program, Part B (insurance covering doctors’ services, outpatient care, medical supplies) and Part D (the prescription drug benefit) are mostly funded by premiums and general revenues, and, according to the trustees report, are “projected to remain adequately financed into the indefinite future.”

–the Trustees’ Report always presents the date that the trust fund won’t be able to fully meet its obligations (see figure below).   As you see, it’s a moving target, most recently shortened by the weak economy and lower tax receipts.  That doesn’t we should ignore the warning, but it does not mean that the insolvency date will continue to change with policy, economic, and cost changes.

–Note the highlighted word “fully” above.  In fact, if the trust fund were to exhaust in 2024, income coming into the fund would still finance 90% of benefits.  That’s something to be avoided, but it’s a different kind insolvency than that implied by the R’s mantra.

Finally, Ryan and company did not discover this challenge of paying for health care.  We have a law on the books to meet the challenge—the Affordable Care Act.  It has already improved Medicare’s fiscal outlook, though the real work—reducing the rate of health care costs for years to come—hasn’t even started yet.

Here’s Bob Greenstein of CBPP on that point:

“Despite the improvements made by the Affordable Care Act, Medicare continues to face significant long-term financial challenges, stemming from the aging of the population and the continued rise in health care costs, that contribute to the bleak federal fiscal outlook.  It is essential that policymakers take further substantial steps to curb the growth of health costs throughout the U.S. health care system as we learn more about how to do so effectively in both public programs and private-sector health care, based in part on the Medicare research and pilot projects the ACA establishes to test new approaches to delivering health care in ways that can lower cost while maintaining or improving quality.”

Complacency is not an option, neither for Medicare nor private sector health care.  We need to continue to implement the ACA and get its cost-control functions up and running.  But the bankruptcy mantra is a misleading tactic designed to scare you into accepting a privatization scheme that will significantly diminish the health care security of retirees.  That too is not an option.

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12 comments in reply to "Misleading Medicare Mantra"

  1. denim says:

    Ok, 2024-2011=13years to a problem. It is so obvious that the Republican sense of urgency to destroy Medicare as currently enacted is because they have a short window of opportunity to so. Should they lose the Senate fillibuster margin and House majority, it’s all over for them. They must just sit, watch, and complain with no more power.

    • Barto says:

      It’s 13 years today, but in thirteen years it may be another 13 years. That’s the point of the article, this is a moving target that is really somewhat meaningless. What isn’t meaningless is the rising costs of healthcare that need to be dealt with, and the best way to do that is through improving Medicare and extending it to everyone.

  2. Susan Hall says:

    Isn’t the Hospital Trust Fund Part A?

    Part C is Medicare Advantage.

    One thing that the Affordable Care Act has done is introduce preventive services into Part B. Those were not covered until this year. This is an attempt to curb the growth in Part A costs. Many seniors end up needing Part A coverage because of conditions that could have been averted through proper preventive care and maintenance.

    Additionally, it seems not be well-understood that long-term care is not covered under Part A. Medicare does not cover this at all. Two-thirds of Medicaid costs take care of seniors on long-term care who have exhausted their personal funds. Right now, cutting medicaid mostly hurts children and young families.

  3. Jeff H says:

    This is exactly why the mantra that Obama isn’t doing anything on entitlements is so ludicrous.

    It’s as if the health care debate never happened.

    As mom would say, Oye Ve!

  4. Han's Solo says:

    So I crunched the numbers. The average projected number of years to insolvency equals 13.68182. For 2011 the projected number of years of solvency equals… 13 years.

    It seems all that has changed is that the GOP turned their outrage up to eleven. They do this when they lose politically, see the Clinton years for an example.

  5. Michael says:

    I know it’s, like, really rude to point this out, but the Ryan Plan contained several outright lies about how the Federal budget works. Given that, why are we supposed to pretend that the Republican criticisms of Medicare are given in good faith?

    By lying in the proposal, Republicans made clear that they don’t take their ideas seriously. I have no idea why I’m supposed to take seriously a proposal which they view as stupid, ridiculous, or whatever other reason they had in their heads when they decided that the only way to support it was lying about it. It’s their proposal. They think it’s a bad idea. Discussion’s over.

  6. Emanuel T. II says:

    So while the your article, Dr. Bernstein, gives credence to the argument that medicare is not likely to become insolvent any time soon, what are the suggestions for solving the issue of fiscal solvency for medicare?

    Admittedly, any plan is an experiment so giving the Affordable Care Act a 5 yr trial run seems appropriate. What is the Affordable Care Acts merits, as you see it Dr. Bernstein, over the “Ryan Plan?”

    Is there a break down for wow does the Affordable Care Act tackle the cost issues?

    Seemingly we are trying to uproot a complex that some knew were dangerous both to doctors and patients, but no one lent
    support because of the non-existence of a major economic issue.

    So how does the public & private sectors jointly deal with industry system related to healthcare & medicare, i.e. the Doctor, Pharmaceutical, Medical Device, Insurance complex? What are the issues? Is there an equivalency in values between all segments of this industry link? Is there the sense of I have the right to generate wealth as I save lives? Or is there a sense that I have the right to generate wealth and I’ll do it by saving lives?

    Are there economic incentives, technological improvements, biomedical adjustments that can surmount the current complex?

    • Michael says:

      Again, there is no “Ryan Plan.” He lied in the documents detailing it. I can’t say this enough. There is no “Ryan Plan.” It is physically impossible to implement the “Ryan Plan,” because of the lies which criss-cross the proposal.

    • Tony K says:

      Yup. Here’s a list of some of the incentives, improvements, adjustments, and cost-savings included in the ACA:


    • Chigliakus says:

      I don’t think anyone would suggest that doctors, pharma companies or medical device manufactureres should work for free. The idea is that doctors shouldn’t be profiting off of unneccesary or ineffective medical procedures. Pharma shouldn’t be colluding with caregivers to prevent the prescription of generics where they’d be similarly effective and cost much less. Medical device manufacturers aren’t entitled to a sell the same expensive device to every hospital in a city where one device could be more cost effective to share between several local hospitals.

      The medical insurance industry on the other hand I think has proven to be a market failure. Here socialism seems like the best option. If we’re going to have death panels anyway, they should be made up of medical experts not unaccountable insurance company employees. Current medical insurance companies are denying care and cancelling policies to improve their bottom line. This is the biggest failing of the ACA, that these companies are kept in the loop instead of acknowledging this market failure and phasing in a proper single payer system.

      I think we could have a more just and vibrant society with people freed from the need to have their employer negotiate an affordable health plan for them and their preexisting condition. Small businesses don’t have to worry about providing a health plan for their employees or their lack of negotiating power on the insurance market. People who are limited under our current system are free to become entrepreneurs, to become self-employed. When they’re successful they are more likely to create jobs and wealth for American communities.

      • Ron Beasley says:

        You are so right, I never had a choice of medical plans, I had to take the one my employer supplied. There were a couple of times I had to change doctors because my doctor didn’t accept my employer’s health plan. I have thought that employer supplied health insurance was responsible for nearly every thing that is wrong with the US healthcare system. I am on Medicare now and don’t have to worry about it anymore but my children do. The two Japanese companies I worked for had the best plans, the US contract manufacturers had the worse.

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